ELEVENTH QUARTERLY REPORT OF THE INDEPENDENT ATHLETICS INTEGRITY MONITOR PURSUANT TO THE ATHLETICS INTEGRITY AGREEMENT AMONG THE NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, THE BIG TEN CONFERENCE AND THE PENNSYLVANIA STATE UNIVERSITY Charles P. Scheeler T. Brendan Kennedy Ellen Ginsberg Simon DLA PIPER LLP (US) May 29, 2015 i I. INTRODUCTION AND SUMMARY.............................................................................1 II. THE MONITOR’S ACTIVITIES THIS QUARTER.......................................................2 III. OBSERVATIONS AS TO SPECIFIC AREAS ...............................................................4 A. The Office of Ethics and Compliance...................................................................4 1. University Ethics.......................................................................................4 a. Ethics Specialist............................................................................4 b. Advisory Council for Continued Excellence (“ACCE”) ..............6 2. Oversight of Programs for Minors (Recommendation 7.3)......................6 a. Implementation of New Child Protection Requirements..............6 b. Youth Programs ............................................................................7 c. Sport Camps..................................................................................8 3. Communications and Training Specialist .................................................8 4. Board of Trustees Report..........................................................................9 5. The Ethics and Compliance Council.........................................................10 6. Tracking Training (Recommendation 2.2.10) ..........................................11 B. Efforts to Combat Sexual Misconduct..................................................................11 1. Activities of the Office of Ethics and Compliance in Response to Recommendations of the Task Force on Sexual Assault and Sexual Harassment ....................................................11 2. Additional University Activities in Response to the Recommendations of the Task Force on Sexual Assault and Sexual Harassment....................................................................................12 3. Sexual Assault Awareness Month ............................................................15 C. Penn State’s Efforts to Complete the Recommendations Required Under the AIA.......................................................................................16 1. University Police and Public Safety .........................................................16 2. Human Resources Information System (Recommendation 2.2.7)...........................................................................17 3. Facilities Security (Recommendation 5.2)................................................17 D. Penn State’s Efforts to Implement the AIA ..........................................................18 1. Activities of the Athletics Integrity Officer ..............................................18 a. General Activities .........................................................................18 b. Educational Activities...................................................................19 2. Athletics Integrity Council Quarterly Meeting.........................................20 ii 3. Ethics and Compliance Hotline Reporting ...............................................20 IV. OTHER EVENTS DURING THE REPORTING PERIOD.............................................22 A. The Athletics Department.....................................................................................22 1. New Personnel ..........................................................................................22 2. Changes to the Athletics Department’s Organizational Structure ...........................................................................22 3. Academic Achievements ..........................................................................23 4. Full Cost of Attendance Stipend...............................................................24 5. Facilities Upgrades....................................................................................25 B. Relevant Lawsuits.................................................................................................25 1. The Paterno Lawsuit .................................................................................25 2. Former President Spanier’s suit against Freeh and Penn State.................................................................................26 3. The Criminal Actions................................................................................27 4. Litigation Concerning the Election of Agricultural Trustees ................................................................................28 5. Lawsuits Filed by Certain Alumni-Elected Trustees Against Penn State ....................................................................................28 a. Legal Proceedings by Seven Trustees Against Penn State to Compel Access to Freeh Report Materials Without Restrictions on Confidentiality.......................29 b. Legal Proceedings by Six Alumni-Elected Trustees Against Penn State to Compel Access to Trustee Candidate Information .....................................................31 C. Penn State Governance and Board of Trustees Activities ....................................35 1. March 20, 2015 Meeting...........................................................................35 a. Governance Reforms ....................................................................35 b. Liquor License Resolution............................................................36 2. April 9, 2015 Special Meeting..................................................................36 3. May 8, 2015 Meeting................................................................................36 a. Governance Reforms ....................................................................36 b. Analysis of Liquor License Pilot ..................................................37 c. Trustee Elections...........................................................................37 V. AREAS OF FUTURE FOCUS.........................................................................................38 1 I. INTRODUCTION AND SUMMARY This is the eleventh quarterly report of the independent athletics integrity monitor (“Monitor”) pursuant to article IV of the Athletics Integrity Agreement (“AIA”) among the National Collegiate Athletic Association (“NCAA”), The Pennsylvania State University (“Penn State” or the “University”), and the Big Ten Conference. This quarter, the position of Monitor transitioned from Senator George Mitchell to Charles P. Scheeler. During this reporting period, Penn State continued to fulfill its obligations under the AIA and to follow through with efforts undertaken in support of the University’s plan for continuous improvement. Within the Office of Ethics and Compliance, Ethics Specialist Timothy Balliett conducted town hall sessions at every Penn State campus in an effort to educate the Penn State community about the proposed Penn State values statement and to obtain feedback from stakeholders in an effort to finalize the statement this summer. The Office of Ethics and Compliance continued working with University personnel to implement youth protection policy and procedural changes introduced in response to new legislation passed by the Pennsylvania General Assembly. Penn State also continued to implement the recommendations proposed in the report issued last quarter by the Task Force on Sexual Assault and Sexual Harassment. The Athletics Department revised its organizational structure to more clearly delineate roles, responsibilities, and reporting lines. Most importantly, with a more “vertical” reporting structure, the Athletics Department is attempting to more quickly and effectively respond to the myriad of decision making requests that reach the Athletic Director’s office. It also hired a new senior associate athletic director for administration. Athletics Integrity Officer Julie Del Giorno fulfilled her quarterly obligations under the AIA by conducting the quarterly meetings of the Athletics Integrity Council and with the Big Ten Conference. 2 The Board of Trustees met three times during this reporting period. The Board authorized offers to settle claims against the University for injuries suffered as a result of Jerry Sandusky’s actions. The Board also held elections for numerous trustee positions; as a result, nine new individuals will join the Board at its July 2015 meeting. Several trustees elected by alumni instituted legal actions against the University seeking to compel access to materials gathered or created in connection with the investigation conducted by Judge Freeh following the indictment and arrest of Jerry Sandusky and of materials concerning the selection of other categories of Penn State trustees. The complainant trustees also demanded that the University pay for the legal fees they incurred in bringing these actions. We continued to monitor external events that relate to the University’s fulfillment of its obligations under the AIA or that otherwise provide context for our activities. II. THE MONITOR’S ACTIVITIES THIS QUARTER This reporting period, the Monitor visited the University Park campus on several occasions to meet with Penn State administrators, faculty, and staff. We continued our participation in regular meetings of the administration response team and the Advisory Council for Continued Excellence. We also continued to monitor the teams composed of administrators and staff from the Athletics Department and the Office of Physical Plant and other University personnel that are overseeing security upgrades at athletics and recreational facilities and the relocation of the Morgan Academic Support Center for Student-Athletes. We continued to observe the quarterly meetings of the Athletics Integrity Council and meetings of the Ethics and Compliance Council, the Compliance Training Committee, the Ethics Committee, and the Youth Programs Council. We attended the Board of Trustees meetings held on March 19-20, 2015 and May 7-8, 2015. 3 Persons we met with since our last report include, among others: Vice President and General Counsel Stephen S. Dunham; Associate General Counsel Frank Guadagnino; Senior Vice President for Finance and Business David Gray; Vice President for Administration Thomas Poole; Vice President for Human Resources Susan Basso; Athletic Director Sandy Barbour; Senior Associate Athletic Director Lynn Holleran; Senior Associate Athletic Director Charmelle Green; Vice President for Student Affairs Damon Sims; Director of University Ethics and Compliance Regis Becker; Athletics Integrity Officer Julie Del Giorno; Youth Programs Compliance Specialist Sandy Weaver; Ethics Specialist Timothy Balliett; Communications and Training Specialist Denise Shivery; Director of the Center for Workplace Learning and Performance Susan Cromwell; Associate Athletic Director for Facilities and Operations Mark Bodenschatz; Faculty Athletics Representative Linda Caldwell; Director of the Morgan Academic Support Center for Student-Athletes Russell Mushinsky; University Police Chief Tyrone Parham; Clery Compliance Manager Gabriel Gates; Interim Assistant Vice President for Police and Public Safety Timothy Mercer; Director of Judicial Affairs Danny Shaha; Student Services Associate Spencer Peters; Sport Camps Director William Mincer; and head coach of the cross country and track and field programs John Gondak. We also continued to work with Guidepost Solutions, LLC to monitor enhancements to physical security and access controls at Penn State’s athletics and recreational facilities. Our activities included a visit to Penn State’s York campus to observe a “town hall” session concerning the proposed Penn State values statement. During that visit, we also observed physical security measures taken at campus athletics facilities, met with York Athletics Director Chris Beaverson, and discussed with Director of Business Services Holly Lynn Gumke the efforts to bring the campus into conformity with Pennsylvania’s new child abuse laws. 4 III. OBSERVATIONS AS TO SPECIFIC AREAS A. The Office of Ethics and Compliance 1. University Ethics a. Ethics Specialist Between February 19, 2015 and April 17, 2015, Ethics Specialist Timothy Balliett conducted 46 meetings with Penn State students, faculty, and staff to publicize the proposed new values statement.1 Dr. Balliett presented the values statement at each of Penn State’s 24 Commonwealth Campuses, 18 of 21 academic colleges, and six of 16 administrative units. He held 21 sessions on the University Park campus alone. More than 2,200 individuals participated in the meetings. A member of the Monitor’s team attended a town hall session held at Penn State’s York campus on April 7, 2015. In each session, Dr. Balliett explained the purpose of the proposed values statement, provided a history of values statements at Penn State, and described the process by which the University developed the new proposed values statement. He reviewed each of the seven proposed core values and their accompanying descriptive statements. Attendees then formed small breakout groups to discuss and respond in writing to questions about each value, providing suggestions for improvements and examples of how the values are used by the community. The Office of Ethics and Compliance also made it possible for members of the community to provide comments electronically through its website or via email. Dr. Balliett analyzed the feedback for common themes and is amending the descriptive statements accompanying each of the seven values accordingly. He is working with the Office of Student Affairs to ensure that the values 1 The proposed values statement is described in the Monitor’s Ninth Quarterly Report at 9-10. 5 are incorporated into new student orientation programming. The new values also are being incorporated in Penn State’s new strategic plan. In addition to the town hall meetings, Dr. Balliett has prepared 28 unit-specific breakdowns of relevant data distilled from the survey on Penn State’s values and culture. These reports cover roughly 65 percent of academic colleges, 44 percent of the campuses, and 38 percent of administrative units. He has met with 14 units to review this customized analysis and to discuss strategies each unit might implement in response to issues identified. Dr. Balliett has prioritized administrative units in which the survey highlighted concerns about retaliation, potential misconduct, and other managerial issues. The Office of Finance and Business has formed a task force to address and mitigate fears of retaliation expressed by some technical support staff through the survey. Dr. Balliett is tying elements of the “Ethical Culture Plan” he is implementing into his work with these units. The “Ethical Culture Plan” is the University’s response to President Barron’s direction to address survey results demonstrating fears of potential retaliation for reporting wrongdoing, lack of understanding of reporting mechanisms, and incidents of workplace intimidation and bullying. As previously noted, the plan includes three components: (1) education; (2) communication; and (3) structural changes. This quarter, Dr. Balliett advanced the plan’s educational component by piloting revised supervisory training courses in 15 different units. The courses include information on how to handle reports of misconduct, how to provide performance feedback, and how to address perceptions of retaliation. In coordination with the Smeal College of Business, Dr. Balliett piloted a three-hour course entitled “Excellence in Management” which focuses on integrating Penn State policy within leadership ranks and includes case scenarios and analysis of specific 6 unit needs. He also piloted a “Penn State Excellence in Leadership” course and an “Emerging Leaders” seminar. Dr. Balliett began developing an academic leadership training module, an ethical awareness program for new employees, and an online ethical awareness module intended for all employees of the University. The online ethical awareness module will incorporate information about the values statement, ethical awareness, Penn State’s ethics policies, reporting processes, confidentiality, anti-retaliation messaging, and ethical-decision making resources. b. Advisory Council for Continued Excellence (“ACCE”) The ACCE held its quarterly meeting on March 5, 2015. At the meeting, it welcomed Dean of Communications Marie Hardin to the Council. Vice Provost for Information Technology Kevin Morooney and Director of Information Systems Joel Weidner presented on information technology changes being instituted across the University system with the help of outside consultants. 2. Oversight of Programs for Minors (Recommendation 7.3) a. Implementation of New Child Protection Requirements Penn State continued to implement its three-tier process for completing the background checks required of employees who have direct contact and routine interaction with minors (persons under age 18). Phase I began in mid-February and included completion of background checks for individuals who most clearly meet the statutory definition of employees requiring background checks because of their custody of and direct interaction with minors. Several units and campuses have employed mobile FBI fingerprinting units to facilitate completion of the process, including the University’s libraries and Penn State York. Phase II, which began in April 2015, includes background checks for business and auxiliary staff who support summer youth programs, such as dining services, and hotel and restaurant employees who interact with minors. The University also has been conducting background checks on all new faculty and staff hired as 7 part of their onboarding process and advising new hires by email of their responsibilities under Policy AD72 as well as their obligation to complete the “Reporting Child Abuse” training. This quarter, Youth Programs Compliance Specialist Sandy Weaver conducted numerous training sessions with University administrative units and academic departments to make them aware of the policy changes. To date, she has met with more than 600 individuals in 37 different units to educate them about the legislative history and rationale behind the changes to Pennsylvania’s child protection laws, the pertinent provisions of the laws, resulting changes to Penn State’s reporting processes, and the new background check requirements. b. Youth Programs The Youth Programs Council met twice this quarter. Its subcommittee reviewing Policy AD39 (“Minors Involved in University-Sponsored Programs”) continued to draft revisions designed to clarify various operational requirements for conducting youth programs at Penn State. The Council also discussed a Youth Program Compliance Self-Review questionnaire that will be distributed to all formal youth programs listed in the Youth Programs Inventory. The questionnaire will gather information about the youth program’s staff, completion of required background checks and trainings, and maintenance of the appropriate staff-to-child ratio. It also will assess the presence of specific program elements designed to promote the safety, security, and appropriate supervision of program participants. Ms. Weaver also tracked and reported to the Ethics and Compliance Council the number of youth protection reports received this year. In the first four months of 2015, 35 reports of incidents relating to minors were made either to ChildLine, the ethics and compliance hotline, or directly to Ms. Weaver. This figure represents an increase in reports for the same time period in 2014, suggesting improved awareness and usage of the reporting process. 8 Penn State made progress this quarter adding programs into the Youth Programs Inventory maintained by Ms. Weaver. All sport camps were registered in the inventory for the first time. In addition, the majority of 4-H programs also began to use the inventory. These steps further centralize all youth program information under the inventory to improve supervision and the sharing of relevant information. Penn State currently has over 1,000 youth programs registered in the inventory. c. Sport Camps To facilitate timely completion of the new background check requirements for camp staff (which can take more than one month to fulfill), Sport Camps Director William Mincer held the annual camp director training on March 17, 2015, two months earlier than usual. He also required that camp directors present him with a list of employees by the end of March and directed that the background check and mandatory training process commence for all prospective employees by the end of April 2015. Mr. Mincer also is developing a Sport Camps Program Guide to outline the proper procedure for establishing and operating a Penn State sport camp. 3. Communications and Training Specialist Communications and Training Specialist Denise Shivery chaired three meetings of the Compliance Training Committee this reporting period. The Committee continued to oversee implementation of Cornerstone On Demand as the University’s new learning management system. On March 24, 2015, a representative from Cornerstone On Demand provided Committee members with a demonstration of the system and discussed the various options available for tracking and delivering training. The Committee also discussed development of the Title IX and Violence Against Women Reauthorization Act (“VAWA”) trainings and updated training figures for the Clery Act and “Reporting Child Abuse” mandatory courses. 9 Ms. Shivery continued to coordinate the Office’s communications strategies and maintained its website. On March 26, 2015, Penn State Today electronically published the first quarterly newsletter from the Office of Ethics and Compliance. The special compliance edition of Penn State Today contained four articles highlighting the recent changes made to Pennsylvania’s child abuse laws and their impact on faculty, staff, volunteers, and Penn State policies.2 The articles outlined the phases for Penn State’s implementation of the new background check obligations, detailed the requirements for operating youth programs, and contained a list of frequently asked questions about the many new compliance requirements and policy amendments.3 4. Board of Trustees Report Director of University Ethics and Compliance Regis Becker presented his Office’s current activities to the Board’s Committee on Legal and Compliance during its meeting on March 19, 2015. Mr. Becker provided a review of the Athletics Compliance Office, describing 2 See Penn State Today’s Special Edition on Compliance, March 26, 2015, available at http://news.psu.edu/headlines/326-special-edition-penn-state-today/349973/2015-03-26/html. 3 See “Office of Ethics and Compliance announces new communications initiative,” March 23, 2015, available at http://news.psu.edu/story/349527/2015/03/23/office-ethics-andcompliance-announces-new-communications-initiative?utm_source=newswire&utm_medium =email&utm_term=349973_HTML&utm_content=05-05-2015-15-03&utm_campaign= Penn%20State%20Today; see also “University announces phased approach to background checks,” March 23, 2015, available at http://news.psu.edu/story/349544/2015/03/23/universityannounces-phased-approach-background-checks?utm_source=newswire&utm_medium= email&utm_term=349973_HTML&utm_content=05-05-2015-15-11&utm_campaign=Penn% 20State%20Today; “Requirements for the 2015 youth program season,” March 23, 2015, available at http://news.psu.edu/story/349585/2015/03/23/requirements-2015-youth-programseason?utm_source=newswire&utm_medium=email&utm_term=349973_HTML&utm_content= 05-05-2015-15-11&utm_campaign=Penn%20State%20Today; “Frequently asked questions about new compliance requirements,” March 23, 2015, available at http://news.psu.edu/story/349610/2015/03/23/frequently-asked-questions-about-newcompliancerequirements?utm_source=newswire&utm_medium=email&utm_term=349973_HTML&utm_co ntent=05-28-2015-10-28&utm_campaign=Penn%20State%20Today. 10 the roles and responsibilities of each of its seven full-time employees and benchmarking the Office against peer institutions. He reviewed Penn State’s NCAA secondary violations statistics from 2001 through 2014, demonstrating an increase in reporting coincident with the growth and development of the Office.4 Mr. Becker noted that the Athletics Compliance Office responded to more than 600 rules interpretation issues between September 2014 and February 2015 and received between 80 and 125 calls each month from coaches and athletes seeking guidance. Mr. Becker further updated the Committee on athletics compliance training figures for the academic year. He concluded with a description of educational mailings distributed by the Office this year. At the May 7, 2015 meeting of the Committee, Mr. Becker presented on the development of the new Penn State values statement, Dr. Balliett’s town hall sessions across the state, the next steps to be taken in the process of finalizing and obtaining approval for the statement, and plans for socialization of the values statement. 5. The Ethics and Compliance Council This reporting period, Mr. Becker chaired two meetings of the Ethics and Compliance Council at which he summarized the activities of the Privacy Council, Youth Programs Council, Compliance Training Committee, and Ethics Committee. On April 14, 2015, the Council heard a presentation from Dr. Balliett about his recent activities, which were detailed earlier in this report. At the Council’s May 12, 2015 meeting, it reviewed the compliance program at the Penn State Hershey Medical Center. The Council also discussed the new compliance learning management system scheduled for implementation in August 2015, the status of the ethical decision-making model, the development of a mandatory, annual Title IX and VAWA training 4 “A secondary violation is a violation that is isolated or inadvertent in nature, provides or is intended to provide only a minimal recruiting, competitive, or other advantage and does not include any significant impermissible benefit (including, but not limited to, an extra benefit, recruiting inducement, preferential treatment, or financial aid).” NCAA Const., § 19.02.2.1. 11 course under the direction of the Office of Ethics and Compliance, the selection of a new hotline provider, efforts to inform the University community of youth protection policy changes instituted in 2015, and reviewed the current training statistics for the Reporting Child Abuse course. 6. Tracking Training (Recommendation 2.2.10) More than 15,000 employees and volunteers have taken the revised “Reporting Child Abuse” training since January 1, 2015, more than double the number of individuals who completed the training during the same period in 2014. Nonetheless, 82 “campus security authorities” (“CSAs”) have never taken the annually required Clery Act training, which the University is working to resolve. So far in 2015, 649 CSAs have completed the course, comprising 28.7 percent of the individuals obligated to take the training annually. B. Efforts to Combat Sexual Misconduct 1. Activities of the Office of Ethics and Compliance in Response to Recommendations of the Task Force on Sexual Assault and Sexual Harassment In response to President Barron’s directive, the Office of Ethics and Compliance has undertaken several projects recommended in the report of the Task Force on Sexual Assault and Sexual Harassment. These initiatives have included: (1) developing and implementing employee training on sexual misconduct; (2) determining the designation of employees as either “confidential” or “responsible” for reporting purposes; (3) developing training for all advocates, clinicians, and other University employees working with victims of sexual misconduct as well as specialized prevention programming for certain populations; and (4) implementing a new, universal hotline for all misconduct. Compliance Training Specialist Denise Shivery is overseeing development of a training course covering legal and policy requirements related to Title IX, VAWA, sexual harassment, 12 and other sexual misconduct topics. Once completed, all employees are expected to take this training course in the fall. In light of a new federal regulatory requirement to make a VAWA training available by June 30, 2015, Penn State also is developing a separate VAWA training course and is on track to meet that deadline. The Office of Ethics and Compliance completed its designation of employees at University Park as either “confidential” or “responsible.” These designations relate to individuals’ obligations to report or respond to disclosures of sexual misconduct and are intended to remove confusion related to employees’ reporting obligations. It has identified approximately 350 “confidential employees” at University Park who, by virtue of their roles as counselors, clinicians, attorneys, clergy, medical, and other health personnel are not obligated to report such disclosures. Penn State engaged The Network, Inc. as the University’s new, universal hotline service provider. The new hotline will take calls on all subject matters, including issues of sexual misconduct. Callers wishing to report sexual misconduct will be directly routed to the crisis calls division of the call center. The operator in the crisis calls division will conduct a live transfer over the phone to the relevant local resources available for each campus, ensuring that the caller connects with support services immediately. The Office of Ethics and Compliance will be notified of every call. Penn State anticipates that the new hotline vendor will begin work on July 1, 2015. 2. Additional University Activities in Response to the Recommendations of the Task Force on Sexual Assault and Sexual Harassment This quarter, the Office of Student Affairs began a national search for a Title IX coordinator. It also is seeking an educational coordinator and a coordinator of a new bystander intervention program. The University intends to advertise for additional positions in the Title IX 13 Office, including a campus coordinator for Title IX issues to support Commonwealth Campus education, intervention, and discipline regarding sexual misconduct and an education and outreach coordinator for the entire University system. In April 2015, Penn State piloted a climate survey at five different campuses to better understand the scope and nature of sexual misconduct issues at the University as recommended by the White House Task Force to Protect Students from Sexual Assault and being employed at numerous universities across the country. The University is in discussions with several Big Ten Conference schools about embedding a series of common questions in their respective final surveys to gather comparative data. Penn State plans to finalize the survey and deploy it during the fall semester. Penn State also is analyzing the resources needed on Commonwealth Campuses to support a common baseline of services at all locations. The Office of Student Affairs and the Office of Commonwealth Campuses together developed and issued to senior leadership at each campus a survey designed to gather information about currently available sexual misconduct resources, including educational programming, staff, printed materials, disciplinary processes, and counseling services. After analyzing the data, they will coordinate conversations with campus chancellors and student affairs personnel to determine what each campus needs, how much funding is required, and what additional coordination would be useful. The University police are reviewing memoranda of understanding (“MOUs”) between Penn State and local police departments. Current MOUs do not specifically address cases of sexual assault. This semester, Penn State also piloted a new investigative model that will govern the handling of sexual misconduct cases. Former Penn State police officer Spencer Peters joined the Office of Student Conduct in January as a full-time investigator. Mr. Peters’ previous 14 experience as a detective included specialization in cases of sexual assault and harassment. In his new role, Mr. Peters investigates all cases involving sexual assault as well as additional cases involving potential criminality or more serious offenses.5 Director of Judicial Affairs Danny Shaha and Mr. Peters developed the new investigative model and followed it in their handling of three cases this quarter. It is similar to the type of investigative model endorsed by the White House Task Force to Protect Students from Sexual Assault as “encourag[ing] reporting and bolster[ing] trust in the process, while at the same time safeguarding an alleged perpetrator’s right to notice and to be heard.”6 Under the piloted model, a case manager meets with a student who has filed a complaint to explain the investigative and hearing process. The case manager then assigns the case to Mr. Peters, who interviews the complainant, gathers information about the alleged incident, seeks out other witnesses, and determines whether the evidence supports issuing a notice of investigation to both parties. Mr. Peters then meets with and conducts an interview of the accused individual and gathers information and evidence from the accused’s perspective. Both parties are free to bring representatives with them to meetings with Mr. Peters, including attorneys. Mr. Peters then develops an investigative report which should include all relevant evidence of the alleged violation. If Mr. Peters determines that the evidence is sufficient to 5 This quarter, the University completed its investigation into the activities of its chapter of the Kappa Delta Rho fraternity this semester. On May 26, 2015, Penn State withdrew recognition from the fraternity for a three-year period after members posted images of drugs, hazing activities, and nude, unconscious women on a secret Facebook page, concluding that “the sum of organizational misbehaviors is far more than the University can tolerate from a student organization that seeks its imprimatur.” See Letter from Vice President for Student Affairs Damon Sims to Vice Presidents for Standards of the Interfraternity Council Michael Stavrakos and Grant Vasi, May 26, 2015, available at http://www.psu.edu/ur/2014/KDR_Response_May- 26-2015.pdf. 6 See “Not Alone: The First Report of the White House Task Force to Protect Students from Sexual Assault,” April 2014, at 14, available at https://www.notalone.gov/assets/report.pdf. 15 warrant review by a decision-making panel, he then issues a Notice of Charge to both parties and offers to meet separately with each party to review his findings. Both parties have an opportunity to supplement their statements or correct any inaccuracies in Mr. Peters’ report. Any changes are shared with both parties. The Office of Student Conduct then convenes a decision-making panel composed of three individuals who serve as chairs for the Office’s traditional hearing process for other offenses and who are specially trained to review sexual misconduct cases. The panel reviews Mr. Peters’ report and has opportunities to ask him further questions. The panel does not meet with either the accuser or the accused. The panel makes the final determination as to whether the accused is deemed “responsible” for the allegations made and, if so, what sanction(s) are appropriate. Decisions may be appealed to the associate vice president for undergraduate education or his designee, who may consider whether the sanctions were appropriate for the nature of the violation, whether any procedural error affected the process, and whether newly discovered evidence affects the appropriateness of the decision. 3. Sexual Assault Awareness Month Penn State’s campuses marked the observance of Sexual Assault Awareness Month this April through a wide variety of events. Activities at University Park and certain of the Commonwealth Campuses included: lectures; panel discussions; workshops; bystander intervention trainings; book signings; film screenings; self-defense trainings; “Walk a Mile in Her Shoes” events; poster campaigns; distribution of resources about sexual violence, consent, and supporting survivors; fundraisers at local food establishments to raise money for the Centre County Women’s Resource Center; a mattress carry modeled after the protest held at Columbia University; the annual “Take Back the Night” walk; and the annual “Honoring Survival: Transforming the Spirit” event honoring survivors of sexual, emotional, and physical violence. 16 C. Penn State’s Efforts to Complete the Recommendations Required Under the AIA 1. University Police and Public Safety This quarter, Penn State conducted an internal administrative review of the University Police and Public Safety Department and developed numerous recommendations for structural and leadership changes. The assistant vice president for police and public safety was reassigned and replaced on an interim basis by Timothy Mercer. Mr. Mercer, who retired in January 2015 from the Pennsylvania State Police with the rank of lieutenant colonel, brings 27 years of police experience and leadership to the position. Penn State is conducting a national search for a permanent leader for the department. The University also replaced the department’s human resources representative and plans to reorganize the police department along traditional hierarchical lines with more clearly delineated responsibilities. A further recommendation called for the evaluation of current resource allocation within the department to better align it with University priorities. Penn State has been seeking accreditation from the Commission on Accreditation for Law Enforcement Agencies, Inc. (“CALEA”) since March 2013. As previously reported, CALEA conducted an on-site assessment of University Park’s Police Department on September 8-10, 2014 and issued its resulting report on October 22, 2014.7 The report indicated the need for Penn State to institute 30 modifications to written guidelines and provide additional proof of compliance with 44 standards.8 Penn State has since made many policy and procedural enhancements and conducted a mock assessment in April 2015 in preparation for CALEA’s second, on-site assessment scheduled for June 10-12, 2015. 7 See Monitor’s Ninth Quarterly Report at 15-16. 8 See id, citing CALEA Assessment Report, Pennsylvania State University Police Department, 2014. 17 2. Human Resources Information System (Recommendation 2.2.7) This quarter Penn State selected Accenture as the implementation partner to assist it in configuring the new human capital management system. The Office of Human Resources also held an official kick-off event for the project team, project sponsors, and human resources managers on May 26, 2015 to mark the beginning of the implementation phase of the HRIS project. Penn State focused its efforts during this reporting period on implementation of the Cornerstone On Demand learning management system. This system will incorporate all University training programs into a single system that can deliver and track training. It also can be used to set up specific designations, such as “Campus Security Authority” or “Mandated Reporter,” thereby facilitating the notification of particular personnel of role-specific, required trainings. Since February 23, 2015, training leaders from a variety of University departments have met regularly with Cornerstone On Demand’s implementation team to assist in the design and development of the new learning management system which is scheduled to begin operation during the next reporting period. 3. Facilities Security (Recommendation 5.2) Assisted by Guidepost Solutions, LLC, we continued to monitor the University’s efforts to enhance security at its athletics and recreational facilities. During this reporting period, Penn State administrators signed and submitted to the Pennsylvania Department of General Services a delegation agreement. Once that agreement is approved and executed by the Commonwealth, renovation projects to enhance physical access controls will go through the University’s internal design review process and be submitted to the Board of Trustees for approval before construction starts. 18 D. Penn State’s Efforts to Implement the AIA Penn State continued to adhere to its ongoing obligations under the AIA, including annual training for all “Covered Persons,” maintenance of its disclosure log and reporting mechanisms, and the quarterly meeting of Penn State’s Athletics Integrity Council.9 1. Activities of the Athletics Integrity Officer a. General Activities Athletics Integrity Officer Julie Del Giorno conducted her quarterly meeting with Big Ten Conference Representative Chad Hawley on April 28, 2015 and with President Barron on March 31, 2015. She also attended the Big Ten Conference Compliance Group meeting on April 27-28, 2015. On March 23, 2015, she met with Commonwealth Campus chancellors and the vice president for Commonwealth Campus staff members to determine next steps in the evaluation and assessment of athletics programs at the various Commonwealth Campuses. Ms. Del Giorno presented her activities to the Board’s Committee on Legal and Compliance at both of its meetings this quarter. On March 19, 2015, she gave a report comparing statistics from 2013 and 2014 on athletics-related incidents, which showed that in 2014, anonymous reports accounted for 32 percent of total reports versus 65 percent the prior year. She reported on decreased use of the hotline for reports with an attendant increase in direct emails, telephone calls, letters, and in-person reports to her. She attributed these developments to improved understanding of her role and to the professional relationships that have been built with University personnel and students. Ms. Del Giorno’s presentation described the types of incidents reported in each year and provided figures on the number of corrective actions taken 9 The AIA defines “Covered Persons” to include all student-athletes participating in NCAA-sanctioned intercollegiate athletics teams, coaches, team managers, University staff and employees who directly interact with those teams, the Board of Trustees, the president of the University, and members of the athletics director’s executive committee. 19 (14 in each year) and the number of complaints deemed to be unfounded (one and three respectively). On May 7, 2015, she reported that annual training for “Covered Persons” on athletics compliance policies had been completed for more than 1,300 individuals this academic year with approximately 70 individuals still requiring training before June 30, 2015. She also described to the Committee the process related to annual head coach and athletic director certifications of compliance with the AIA and Intercollegiate Athletics Code of Conduct. b. Educational Activities Together with Director of Honor and Integrity at the Smeal College of Business Jennifer Eury, Ms. Del Giorno provided ethics awareness training to a number of employee groups in the Smeal College of Business this quarter. Ms. Del Giorno conducted leadership sessions with the women’s soccer team and the field hockey team, a communications training and motivational session with the women’s lacrosse team, and a values training with the women’s soccer team captains. She also held a personal values and ethics awareness seminar with the freshmen football players. On March 25, 2015, Ms. Del Giorno led a Head Coaches Forum on the topic of NCAA expectations related to head coach responsibilities. She delivered a presentation at the Lion Leadership Conference for all newly selected admissions office tour guides entitled “Leadership and Navigating Ethical Dilemmas” on March 29, 2015. She also conducted a rules education training session for admissions tour guides specifically assigned by the Admissions Office to support the football program and other athletics programs on April 9, 2015. She assisted the athletics compliance staff with delivery of an NCAA rules education session for football coaches and staff on April 17, 2015 and provided individualized “Covered Person” training for certain athletics staff unable to attend their scheduled group session. 20 2. Athletics Integrity Council Quarterly Meeting On March 25, 2015, Ms. Del Giorno chaired the quarterly meeting of the Athletics Integrity Council. The Council reviewed several ongoing investigations and other new content in the Quarterly Monitoring Report that serves as Penn State’s disclosure log for athletics-related compliance reports and investigations. The members discussed the level of consistency in discipline measures taken in response to student-athlete misconduct. The Council agreed to collect team rules from each head coach for comparison. Ms. Del Giorno also clarified that she should be informed of all misconduct, including policy violations and breaches of the law. She noted that she also is auditing student-athlete arrest records to ensure that reporting is occurring. Mr. Stolberg updated the Council on the University’s ongoing efforts to comply with the AIA’s annual requirement that all “Covered Persons” be trained on NCAA, Big Ten Conference, and Penn State athletics compliance policies. Mr. Stolberg further reviewed recent secondary violations of NCAA rules and their outcomes. The group discussed the need to appoint a new academic member of the Council in June and agreed to consider appropriate faculty for the role. 3. Ethics and Compliance Hotline Reporting Ms. Del Giorno received 15 new complaints during the course of this reporting period. Four of the incidents were reported anonymously via the hotline or by telephone. Ms. Del Giorno received the remaining, non-anonymous reports directly by telephone or email. The reports involved: arrests of several student-athletes and employees for driving under the influence; citations for excessive consumption of alcohol and underage drinking by several student-athletes and one staff member; an allegation of drug use by a student-athlete; unauthorized entry into a residence hall; a potential Countable Athletically Related Activity (“CARA”) violation; an allegation of inaccurate roster numbers for a team; inappropriate texts sent by a member of the Athletics Department staff; complaints about student athletes cut from a 21 team; an inadvertent computer data privacy breach; and an allegation of sexual misconduct by a student-athlete. Nine of these complaints have been investigated and resulted in actions taken, and one was deemed to have no merit. The remaining five reports are under investigation. The student-athlete facing an allegation of sexual misconduct and unauthorized entry into a dorm will face the University’s standard disciplinary process. A student-athlete who committed multiple student conduct violations in addition to violations of team and intercollegiate athletics department code of conduct standards was dismissed from the relevant team when all details of the multiple infractions were discovered by Ms. Del Giorno and presented to the head coach and Athletics Department leadership. In the process of discovering this unreported infraction, Ms. Del Giorno learned she was not receiving reports of all infractions committed by student-athletes from the Office of Student Conduct and some coaches. She is coordinating with Director of Judicial Affairs Danny Shaha, Athletic Director Sandy Barbour, and Senior Associate Athletic Director Lynn Holleran to rectify this. She also is collecting data from the Office of Student Affairs and local court records to ensure that she is independently aware of all potential infractions by student-athletes. The Athletics Department will communicate to its staff the expectation that, in the future, all potential infractions of law or University policy will be reported to the athletics integrity officer. Ms. Del Giorno also prompted action to correct issues related to a graduate program in the College of Education. Ms. Del Giorno discovered an imbalance in the number of graduate assistants in the Athletics Department enrolled in the program. While there were no issues discovered in regard to the enrollment imbalance, a further review revealed standards for program admission and enrollment in independent study courses that were inconsistent with University expectations for all enrolled graduate students in the program. The college and 22 department housing the program are revising admissions standards and, in addition to other changes, in the future will require the approval of the department head for all independent study courses. IV. OTHER EVENTS DURING THE REPORTING PERIOD A. The Athletics Department 1. New Personnel On February 27, 2015, Athletic Director Sandy Barbour announced the appointment of Lynn Holleran as senior associate athletic director for administration. Ms. Holleran began her duties at Penn State on March 30, 2015. She brings more than thirty years of higher education and athletics-related administrative experience to the University. Most recently, she served for the past four years as the director of the McNamara Academic Center for Student-Athletes at the University of Minnesota where she supervised the academic support of more than 750 studentathletes in 25 varsity programs. Ms. Holleran’s duties include oversight of the compliance and human resources units within the Athletics Department and working closely with Ms. Barbour and other senior athletics administrators to handle the daily administrative operations of the Athletics Department. 2. Changes to the Athletics Department’s Organizational Structure On March 16, 2015, Athletic Director Sandy Barbour announced a formal reorganization of the Athletics Department and issued a revised chart of reporting lines. The changes instituted create a more vertical structure and include four administrative divisions overseeing: (1) business and finance; (2) student-athlete performance, health, and welfare; (3) internal and external operations; and (4) administration. These divisions are led, respectively, by Senior Associate Athletic Director Rick Kaluza, Senior Associate Athletic Director Charmelle Green, Chief Operating Officer Phil Esten, and Senior Associate Athletic Director Lynn Holleran. 23 Ms. Barbour, who is one of only seven female athletic directors among the 120 schools within the Football Bowl Subdivision, chose an equal number of men and women to compose her administrative leadership team.10 The compliance office housed within the Athletics Department will continue to report to the director of ethics and compliance at Penn State to ensure that the compliance function operates independently. The Office of Human Resources now provides additional input with respect to negotiating coaching contracts. Vice President for Human Resources Susan Basso presents the more high profile, higher salaried coaching contracts to the Board’s Committee on Compensation, and the Office of Human Resources is involved in preparing benchmarking data and research to provide market support for those contracts. Ms. Basso also meets quarterly with Ms. Barbour. 3. Academic Achievements A record 500 Penn State student-athletes earned a grade point average (“GPA”) of 3.00 or higher during the fall semester, comprising 62 percent of the student-athlete population.11 A record 241 student-athletes also earned Dean’s List honors in the fall for achieving a GPA of 3.50 or higher.12 In addition, a record 23 teams earned an average GPA of 3.00 or higher in the fall.13 Seventy Penn State student-athletes from eight winter teams earned Academic All-Big 10 See John McGonigal, “Sandy Barbour pioneering as Penn State’s first female athletic director,” The Daily Collegian, April 29, 2015, available at http://www.collegian.psu.edu/sports/article_5260ed9a-ee13-11e4-8ce5-07a6d635b76a.html. 11 See “Record 500 Penn State student-athletes earn 3.0 GPA during fall semester,” March 25, 2015, available at http://news.psu.edu/story/349971/2015/03/25/academics/record- 500-penn-state-student-athletes-earn-30-gpa-during-fall. 12 Id. 13 Id. 24 Ten Conference honors, improving upon last year’s record of 65.14 This figure brought to 142 Penn State’s total number of Academic All-Big Ten Conference honors to date in the 2014-15 academic year.15 To be eligible for this distinction, student-athletes must be letter winners in at least their second academic year and maintain a cumulative GPA of 3.00 or higher.16 Seven Penn State teams also received a Public Recognition Award from the NCAA after earning high scores in the latest Academic Progress Rate (“APR”) compilation.17 4. Full Cost of Attendance Stipend As previously reported, Penn State will disburse $1.725 million in the 2015 fiscal year to accommodate the full cost of attendance stipends for student-athletes on aid.18 The full cost of attendance stipend is designed to supplement student-athletes’ scholarships by covering cost-ofliving expenses that fall outside of the expenses currently covered by scholarships. Approved at the January 2015 NCAA convention, the cost of attendance stipend is determined according to federal guidelines taking into account campus size, population, and other relevant figures. This quarter, Penn State determined that it will offer cost of attendance stipends of up to $4,788 per student annually. This constitutes the sixth highest figure in the nation and the highest figure in the Big Ten Conference.19 14 See “Record 70 Penn State student-athletes earn winter Academic All-Big Ten honors,” April 9, 2015, available at http://news.psu.edu/story/352191/2015/04/09/academics/record-70-penn-state-student-athletesearn-winter-academic-all-big. 15 Id. 16 Id. 17 See “Seven Penn State Teams Earn NCAA Public Recognition Award for High APR Score,” May 20, 2015, available at http://www.gopsusports.com/genrel/052015aab.html. 18 See Monitor’s Tenth Quarterly Report at 28. 19 See Ben Jones, “Penn State Football: Cost of Attendance Stipend Projected To Be One Of The Nation’s Highest,” StateCollege.com, April 10, 2015, available at 25 5. Facilities Upgrades On March 20, 2015, the Board approved appointment of an architectural firm to design upgrades of the lacrosse facility at University Park. The lacrosse field was built in 2011 to replace the field that was demolished during construction of the Pegula Ice Arena. The first stage of the upgrade will involve construction of terraced seating at a budgeted cost of $2.5 million. Other planned enhancements include construction of a press box, restrooms, and concessions at an estimated cost of $8.4 million. The Board will approve final plans for the new lacrosse field once the architects complete the design. B. Relevant Lawsuits During this reporting period, we continued to monitor several lawsuits related to the Consent Decree and the University’s fulfillment of its duties under the AIA. 1. The Paterno Lawsuit On March 30, 2015, the court in Estate of Joseph Paterno v. NCAA, resolved multiple pending motions. The court precluded the estate of Joseph Paterno from pursuing relief for an alleged breach of contract (i.e., a claimed violation by the NCAA of its constitution and operating and administrative bylaws). The court also denied plaintiffs’ motion to modify the protective order governing the exchange of confidential information in that proceeding and overruled the NCAA’s objection to the plaintiffs’ motion for permission to issue subpoenas to compel deposition testimony of certain witnesses.20 On April 29, 2015, the NCAA filed its answer to the plaintiffs’ second amended complaint. On May 8, 2015, the court ordered the law firm Pepper Hamilton, LLP to produce http://www.statecollege.com/news/local-news/penn-state-football-cost-of-attendance-stipendprojected-to-be-one-of-the-nations-highest,1463545/. 20 Opinion and Order, dated March 30, 2015, Estate of Joseph Paterno v. Nat’l Collegiate Athletic Ass’n, No. 2013-2082 (Ct. Com. Pl. Centre Co. May 30, 2013). 26 documents in response to a subpoena issued by the plaintiffs.21 On May 18, 2015, former trustee Al Clemens voluntarily withdrew as a plaintiff in the action.22 On May 19, 2015, both Penn State and Pepper Hamilton LLP filed separate notices of appeal with respect to the court’s order that they produce documents in response to the plaintiffs’ subpoenas.23 2. Former President Spanier’s suit against Freeh and Penn State On July 11, 2013, former Penn State President Graham Spanier gave notice that he intended to file a civil action for defamation against Louis Freeh and Freeh Sporkin & Sullivan LLP.24 Further action in that litigation was stayed pending resolution of the criminal action against Dr. Spanier by order of the court dated February 25, 2014. On March 18, 2015, Dr. Spanier filed motions to modify the stay and to join Judge Freeh’s firm Freeh Group International Solutions, LLC and Penn State as additional parties in a proposed complaint.25 21 Order dated May 8, 2015, Estate of Joseph Paterno v. Nat’l Collegiate Athletic Ass’n, No. 2013-2082 (Ct. Com. Pl. Centre Co. May 30, 2013). Penn State previously had objected to the plaintiffs’ subpoena on grounds that the requested materials were protected from disclosure by the attorney-client privilege and attorney work product doctrine, but the trial court overruled the University’s objection on September 11, 2014. Penn State appealed the adverse ruling to the Superior Court of Pennsylvania, which is pending. 22 See Plaintiffs’ Response to the New Matter of Defendant National Collegiate Athletic Association, dated May 19, 2015, Estate of Joseph Paterno v. Nat’l Collegiate Athletic Ass’n, No. 2013-2082 (Ct. Com. Pl. Centre Co. May 30 2013) at n. 1; see also “Former trustee Alvin Clemens withdraws from Paterno estate lawsuit,” May 19, 2015, available at http://www.centredaily.com/2015/05/19/4755692_former-trustee-alvin-clemenswithdraws.html?rh=1. 23 See Notice of Appeal filed on behalf of: Non-Party Pepper Hamilton LLP, dated May 19, 2015, Estate of Joseph Paterno v. Nat’l Collegiate Athletic Ass’n, No. 2013-2082 (Ct. Com. Pl. Centre Co. May 30, 2013); see also Notice of Appeal filed on behalf of: The Pennsylvania State University, dated May 19, 2015, Estate of Joseph Paterno v. Nat’l Collegiate Athletic Ass’n, No. 2013-2082 (Ct. Com. Pl. Centre Co. May 30, 2013). 24 See Docket, Spanier v. Freeh, No. 2013-2707 (Ct. Com. Pl. Centre Co. July 11, 2013). 25 Id. 27 Dr. Spanier’s proposed complaint asserts four causes of action against Mr. Freeh and Freeh Sporkin & Sullivan LLP for defamation in connection with statements made in the Freeh Report and offered orally and in writing by Mr. Freeh at press conferences and would add a fifth cause of action against Mr. Freeh and Freeh Group International Solutions, LLC for interference with a prospective business arrangement. The proposed complaint also asserts seven claims for breach of contract against Penn State claiming that Penn State and certain trustees made negative comments about him in violation of Dr. Spanier’s separation agreement with the University and that the University failed to provide him with administrative support and to reimburse him for legal fees and expenses.26 3. The Criminal Actions As reported last quarter, Graham Spanier, Timothy Curley, and Gary Schultz appealed the trial court’s January 14, 2015 decision to deny several motions seeking, among other things, to suppress certain grand jury testimony and dismiss the charges against them.27 On March 4, 2015, the judge presiding over the criminal actions denied the motions of defendants Curley and Schultz to certify the court’s January order denying their motions as interlocutory.28 In orders dated May 6, 2015, the Supreme Court of Pennsylvania denied without prejudice the defendants’ 26 See Motion for Leave to Join Additional Defendants at Exhibit 1, Spanier v. Freeh, 2013-2707 (Ct. Com. Pl. Centre Co. July 11, 2013). 27 Monitor’s Tenth Quarterly Report at 30-31. 28 Memorandum Order dated March 4, 2015, Commonwealth of Pennsylvania v. Curley, CP-22-CR-3614-2013 (Ct. Com. Pl. Dauphin Co. Aug. 1, 2013); Memorandum Order dated March 4, 2015, Commonwealth of Pennsylvania v. Schultz, CP-22-CR-2616-2013 (Ct. Com. Pl. Dauphin Co. Aug. 1, 2013). 28 request for extraordinary relief but permitted the defendants to file a further application under seal.29 4. Litigation Concerning the Election of Agricultural Trustees During this reporting period, the court presiding over a lawsuit initiated by Jess Stairs against the Board of Trustees and Trustees Masser and Huber claiming improprieties in connection with the election of trustees who represent Pennsylvania’s agricultural societies overruled the defendants’ preliminary objections to that civil action.30 On April 28, 2015, the defendants asserted a new matter (defense) in response to Mr. Stairs’ lawsuit in which they contend that Mr. Stairs’ own misconduct in connection with the election of agricultural trustees last May bars his claims. Plaintiff’s response to the new matter is pending. 5. Lawsuits Filed by Certain Alumni-Elected Trustees Against Penn State Alumni-elected trustees filed two legal proceedings against the University this quarter, and they also made a demand on the University to pay for the lawyers that these trustees have retained to bring these suits. The lawsuits and the accompanying public statements reflect a heightening of tensions as to certain issues between certain trustees and Board and administrative leadership. 29 Order dated May 6, 2015, Commonwealth of Pennsylvania v. Spanier, No. 29 MM 2015 (Pa. 2015); Order dated May 6, 2015, Commonwealth of Pennsylvania v. Curley, No. 27 and 28 MM 2015 (Pa. 2015); Order dated May 6, 2015, Commonwealth of Pennsylvania v. Schultz, No. 30 and 33 MM 2015 (Pa. 2015). 30 Opinion and Order, dated April 8, 2015, Stairs v. Board of Trustees of The Pennsylvania State University, Docket No. 2014-2546 (Ct. Com. Pl. Centre Co. Dec. 5, 2014). 29 a. Legal Proceedings by Seven Trustees Against Penn State to Compel Access to Freeh Report Materials Without Restrictions on Confidentiality As previously reported, in November 2014, nine alumni-elected trustees requested the assistance of Board of Trustees Chair Keith Masser to obtain files related to the creation of the Freeh Report. Mr. Masser agreed to grant access to those files subject to certain confidentiality restrictions to protect those persons who provided information to the Freeh investigators upon assurances of confidentiality.31 In particular, the names of the interviewees were to be redacted from the files prior to review by the trustees. On April 15, 2015, seven of the alumni-elected trustees sent a “Formal Demand To Inspect and Copy Corporate Records” to Mr. Masser and President Barron. In support of their request, the trustees stated: This request includes, but is not limited to, the approximately 470 unredacted interview memoranda generated in connection with the investigation as well as all communications involving members of the Special Investigative Task Force of The Pennsylvania State University Board of Trustees and [Freeh Sporkin & Sullivan, LLP, Freeh Group International Solutions LLC] or the Pennsylvania Office of Attorney General and/or the NCAA. We require access to the Source Material to fulfill our fiduciary obligations as Trustees, including to ensure that University funds are properly allocated, to understand and fulfill the University’s legal responsibilities, to evaluate the conclusions and recommendations in the Freeh Report, and to determine whether anyone, including current or former Trustee(s), exerted undue influence over the preparation of the Freeh Report. We also require access to Source Material to independently evaluate the liabilities and operations of the University, including the University’s valuation and settlement of claims filed against the University and to independently assess whether the Freeh Report objectively, fairly and accurately summarizes the Source Material.32 31 Monitor’s Ninth Quarterly Report at 29. 32 Memorandum dated April 15, 2015 from Trustees Brown, Doran, Jubelirer, Lubrano, McCombie, Oldsey, and Pope to Chair Masser and President Barron. 30 In response, the University reiterated its earlier offer to make available materials subject to an agreement which would honor the promises of confidentiality made to Penn State employees during their interviews. The University’s counsel stated: Some of the records you have requested include sensitive and private information shared by hundreds of Penn State employees, officials, and others associated with the University in exchange for a promise of confidentiality. In President Barron’s view, honoring the promises of confidentiality that were made to the University’s trustees, administration, students and staff members is vitally important and in the University’s best interests. The very fact that you have publicly demanded to review this information is harmful to the University… The University administration has directed me to work with you to reach a compromise solution that will satisfy your desire to review the Source Materials, while at the same time protecting the University’s interest in safeguarding its privileged materials and the confidentiality of individuals who were interviewed by Judge Freeh and his team. To date, Trustees Lubrano and Oldsey have refused the University’s prior offers of compromise. Their ongoing refusal to review the millions of non-privileged Source Materials that the University would make available to them if they signed a confidentiality agreement is perplexing. I suggest that before pursuing this matter further, you sign a confidentiality agreement and review the non-privileged documents that we have made available to you. Any other course of action would subject the University to additional and unnecessary burdens and expenditures of resources and is not in the University’s best interest. The University is willing to provide access to the literally millions of non-privileged documents reviewed by Judge Freeh, but for the reasons set forth above, the University will not provide or grant access to the privileged and/or work product protected materials, including the interview memoranda which are subject to expectations of confidentiality and privacy, and which do not relate to the performance of your duties as Trustees.33 33 Letter dated April 17, 2015 from Joseph O’Dea, Jr., Esq. to Trustees Brown, Doran, Jubelirer, Lubrano, McCombie, Oldsey, and Pope. 31 Seven alumni-elected members of the Board of Trustees initiated a civil action on April 20, 2015 in the Centre County, Pennsylvania Court of Common Pleas to compel disclosure of the Source Materials. On April 23, 2015, they provided to the University a proposed confidentiality agreement relating to the documents sought.34 On May 13, 2015, Penn State opposed the trustees’ request to compel disclosure. The University argued that, “[i]f the records relating to the investigation are made available to Petitioners, this act alone will have broken that promise and will have potentially exposed these individuals to harassment and retaliation, and all of the work done by the University to encourage the reporting of wrongdoing will be ruined.”35 b. Legal Proceedings by Six Alumni-Elected Trustees Against Penn State to Compel Access to Trustee Candidate Information On April 27, 2015, six alumni-elected trustees sent a letter to Mr. Masser demanding documents relating to the selection of At-Large and Business and Industry trustees.36 They stated: Mr. Masser attempts to create separate classes of Trustees—a preferred class (which includes Mr. Masser) with superior access to corporate information and a second inferior class without access to corporate information. Such disparate treatment cannot be squared with the rights and duties in the Nonprofit Corporation Law. Relief from this Court is necessary to correct the imbalance and disparate treatment.37 34 See email from Carol A. Kelleher to Joseph F. O’Dea, Jr. re: The Pennsylvania State University, attaching a draft Agreement Regarding Access to Material, dated April 23, 2015. 35 The Pennsylvania State University’s Memorandum in Opposition to the Trustees’ Petition to Compel Inspection of Corporate Information, In re: Application by Non-profit Corporation Trustees to Compel Inspection of Corporate Information, No. 1593-2015 (Ct. Com. Pl. Centre Co. May 13, 2015), at 2-3. 36 Petition for Preliminary Injunction Pursuant to Pa. R. Civ. P. 1531 at Exhibit B (Letter dated April 27, 2015 from Trustees Brown, Doran, Jubelirer, Lubrano, Oldsey, and Pope to Chair Masser), In re: Application by Non-Profit Corporation Trustees to Compel Inspection of Corporate Information, No. 1593-2015 (Ct. Com. Pl. Centre Co. May 4, 2015). 37 Id. 32 In response, Mr. Masser agreed to make available “the names and biographical information previously made available to the members of the B&I and At-Large Selection Groups,” subject to the trustees’ written agreement to maintain the confidentiality of the information concerning the candidates.38 On May 4, 2015, the six alumni-elected trustees who signed the April 27, 2015 letter to Mr. Masser filed a petition in state court seeking an injunction compelling the Board of Trustees to disclose records related to the selection of candidates to serve as Business and Industry and At-Large trustees.39 In their petition, they agreed to keep the information confidential. Accordingly, the documents requested were made available to all trustees who agreed to maintain the confidence of their contents.40 On May 4, 2015, seven trustees sent President Barron a letter requesting that the University reimburse them for “legal fees and related expenses incurred . . . in connection with [their] efforts to inspect University documents and to obtain information related to the selection of University Trustees.”41 They further stated that if their request is refused they “are prepared to file an action to enforce [their] indemnification rights.”42 38 See Letter from Keith Masser to Ted Brown, Barb Doran, Bob Jubelirer, Anthony Lubrano, Bill Oldsey and Alice Pope, dated April 29, 2015; see also “Penn State alumni trustees press for information on selection of business, industry reps,” May 4, 2015, available at http://www.centredaily.com/2015/05/04/4732878/alumni-trustees-press-for-information.html. 39 Petition for Preliminary Injunction Pursuant to Pa. R. Civ. P. 1531, In re: Application by Non-Profit Corporation Trustees to Compel Inspection of Corporate Information, No. 1593- 2015 (Ct. Com. Pl. Centre Co. May 4, 2015). 40 See Letter from Keith Masser all members of the Board of Trustees, dated May 5, 2015; see also “Penn State alumni trustees press for information on selection of business, industry reps,” May 4, 2015, available at http://www.centredaily.com/2015/05/04/4732878/alumni-trustees-press-for-information.html. 41 Letter dated May 4, 2015 from Trustees Brown, Doran, Jubelirer, Lubrano, McCombie, Oldsey, and Pope to President Barron, available at http://www.psu.edu/ur/2014/Indemnification_Letter.pdf. 42 Id. 33 On May 5, 2015, President Barron responded in an open letter. He stated: This is in response to your letter to me of May 4, 2015, a copy of which is attached. In your letter, you made the demand that the University pay your legal fees and related expenses in connection with the growing number of lawsuits you have filed or threatened against the University and its Trustees. Your request is made even more outrageous by your threat of yet another lawsuit against Penn State if we do not pay your costs of suing the University. First, the Bylaws do not require the University to pay for lawsuits against it, including frivolous and damaging lawsuits like the petition you filed yesterday. As you are aware, your last lawsuit was completely unnecessary. You demanded the names and information about trustee candidates who were not selected, when confidentiality is a standard practice among non-profits to ensure that high-caliber candidates apply. You did so even though the requested documents have nothing to do with the exercise of your fiduciary duties. Board communications to you over the past few days clearly offered to make available to you the requested materials subject only to your commitment that you would keep the information confidential. Rather than simply agree to maintain that confidence, which, as fiduciaries, you are obligated by law and Board policies to do, you elected to litigate. It is difficult to fathom why you would squander University resources in such a manner. The University will not pay you to sue us. If anything, you should be offering to reimburse the University for its legal costs in responding to this lawsuit. Second, as President, I am very concerned about your approach to confidentiality and to your fiduciary responsibilities. We have a growing number of failures to abide by the Board’s Expectations of Membership, even when the potential for serious financial harm to the University is evident. We have moved into a position of having to repeatedly reconfirm the commitment to confidentiality in order to protect the University from unnecessary harm. I now hear regularly from students, faculty, staff and alumni expressing both concern and fatigue in seeing our own Trustees suing their University. Penn State’s mission is teaching, research and service. Your actions are not serving that mission. It seems to many of us 34 that this is becoming a campaign against Penn State. Please reconsider these unfortunate actions.43 As quoted above, both President Barron and University counsel have claimed that the University has been damaged by these trustee lawsuits. Penn State repeatedly has emphasized that it has devoted a great deal of time and energy encouraging a “see something, say something” environment in the wake of the Sandusky tragedies. It has strengthened – and on occasion, enforced – its anti-retaliation policies and is undertaking a myriad of other activities which we have earlier reported. Moreover, these efforts to enhance ethics and compliance at Penn State have yielded tangible benefits and external recognition. On April 23, 2015, Moody’s Investor Services gave the University a rating of Aa2 with a positive outlook, specifically citing “significantly strengthened governance and management practices.”44 The Middle States Commission on Higher Education not only indicated that Penn State meets all ten requirements for accreditation, but gave the University 14 commendations and specifically cited Penn State’s leadership in ethics and compliance, stating that “many institutions talk about integrity, but Penn State lives integrity.”45 But the issue is persistent: Penn State has reported that its University-wide values and culture survey revealed continuing fears by staff that they might be subject to retaliation if they report wrongdoing. These concerns are not limited to child abuse but extend to sexual assault 43 Open Letter from President Barron dated May 5, 2015, available at http://news.psu.edu/story/356242/2015/05/05/administration/letter-penn-state-president-ericbarron. 44 See “Moody’s gives Penn State positive rating, citing improved governance,” Penn State Live, April 26, 2015, available at http://news.psu.edu/story/354685/2015/04/26/administration/moody%E2%80%99s-gives-pennstate-positive-rating-citing-improved; see also President Barron’s report at the May 8, 2015 Board meeting, available at https://www.youtube.com/watch?v=2d4kt438MAs. 45 See President Barron’s report at the May 8, 2015 Board meeting, available at https://www.youtube.com/watch?v=2d4kt438MAs. 35 and harassment, university-sponsored research, and a host of other compliance issues. Penn State is not alone in engaging in an initiative to promote reporting; particularly in the area of sexual assault, universities across the nation are seeking to effect attitudinal change consistent with Penn State’s efforts. The suit brought by seven trustees to obtain the Freeh interview materials, coupled with their refusal to accept the confidentiality provisions proffered by the University, has led the University to express concerns about the chilling effect this suit might have on personnel with knowledge of possible wrongdoing. Their argument is that, if Penn State employees see prior promises of confidentiality not honored or overridden in a judicial process, they will be less likely to be forthcoming. It is not possible to judge how potent this chilling effect is, if indeed, it exists at all. But the “see something, say something” environment that Penn State and many of its peers are attempting to create is undeniably important. The advocates of this initiative frequently point to an episode which was reported to have occurred in the fall of 2000 when a janitor observed Jerry Sandusky assault a young boy on campus. Another janitor saw two pairs of feet in a shower, and he later saw Sandusky and a young boy leave a locker room holding hands. Neither reported what they saw, “fearing that they would be fired.”46 C. Penn State Governance and Board of Trustees Activities 1. March 20, 2015 Meeting a. Governance Reforms On March 19, 2015, the Committee on Governance and Long Range Planning discussed potential methods for conducting a Board self-assessment in response to Trustee Goldstein’s 46 See “Report of the Special Investigative Counsel Regarding the Actions of The Pennsylvania State University Related to the Child Sexual Abuse Committed by Gerald A. Sandusky,” Freeh Sporkin & Sullivan, LLP, July 12, 2012, at 62. 36 January 16, 2015 resolution to conduct one this year. The Committee further discussed potential revisions to the Board’s Standing Orders to clarify the role of trustees emeriti and revisions to the rules of order. b. Liquor License Resolution At the March 20, 2015 meeting, the Board approved the application for a public venue liquor license at the Bryce Jordan Center by a vote of 13 to 7. Several trustees expressed their concern over the demonstrated correlation between alcohol consumption and sexual misconduct and spoke about University efforts to reduce alcohol consumption on campus. The University approved use of the liquor license for one concert series (Garth Brooks) at the Bryce Jordan Center but indicated that its continued use will depend on evaluation of this first experience. 2. April 9, 2015 Special Meeting On April 9, 2015, the Board conducted a special meeting to vote on a resolution authorizing offers to settle claims by individuals alleging University liability for injuries they suffered as a result of Jerry Sandusky’s actions. After meeting in executive session to discuss confidentially the dollar limits of the settlements, the trustees voted 18 to 6 in favor of the resolution. 3. May 8, 2015 Meeting a. Governance Reforms The Committee on Governance and Long-Range Planning formally approved the appointment of three members to the Board of Directors of the Hershey Medical Center: Kathleen Casey; Barry Robinson; and Edward Junker, III. It also formally approved the candidates selected by the students and faculty to serve as their respective representatives on the Board. 37 The Committee also continued its discussion about the status of emeriti trustees. Based on feedback from Board members and emeriti trustees, the Committee developed a proposal to retain the emeritus trustee status and better define the parameters of their selection, roles, responsibilities, and privileges. The Committee intends to hold a telephonic meeting in the coming weeks to formally approve the proposal for presentation to the full Board in July 2015. b. Analysis of Liquor License Pilot At the May 7, 2015 meeting of the Committee on Legal and Compliance, Vice President for Finance and Business David Gray presented an analysis of the piloted use of the liquor license at a concert series at the Bryce Jordan Center. The University controlled alcohol consumption by restricting patron purchases to three beers per show, providing wrist-bands upon demonstration of age, and stationing on site a large number of University and state police specially trained on liquor control. No remarkable health or safety incidents occurred. The University estimates that it netted between $70,000 and $90,000 from alcohol sales. Penn State has not yet decided whether it will make future use of the liquor license. c. Trustee Elections The first trustee elections occurring since the institution of the Board’s new governance structure will result in the addition of nine new trustees to the Board, each of whom will take their seats for the first time at the July 2015 meeting. This spring, Trustees Anthony Lubrano and Ryan McCombie sought re-election, and Robert Tribeck ran for the seat vacated by former Trustee Adam Taliaferro. They were elected without opposition. On May 7, 2015, delegates from Pennsylvania’s agricultural societies elected two trustees. Trustee Donald Cotner was reelected and Chris Hoffman was newly elected to the Board. 38 The Board’s internal selection committee recommended two candidates for election as Business and Industry trustees. The Board approved the election of Mary Lee Schneider and Robert Fenza. The Board’s internal selection committee recommended three candidates to serve as the Board’s first At-Large trustees. By a vote of 16 in favor with 11 abstentions, the Board approved the election of Kathleen Casey to a term of one year expiring on June 30, 2016, Matthew Schuyler to a term of two years expiring on June 30, 2017, and Julie Anna Potts to a term of three years expiring on June 30, 2018. Each of the At-Large trustees will begin their staggered terms of office on July 1, 2015. The Board unanimously elected Student Trustee Luke Metaxas to a two-year term and Academic Trustee Dr. David Han to a three-year term. Immediate Past President of the Penn State Alumni Association Kay Salvino also will be joining the Board for a two-year term as an ex officio voting member. V. AREAS OF FUTURE FOCUS Our next report will constitute the third annual report of the Monitorship. In the coming quarter, we will continue to monitor the implementation of the changes to Penn State’s policies, procedures, and training related to child protection and background check obligations. We also will continue to observe Penn State’s efforts to finalize and socialize the Penn State values, develop an ethical decision-making model, implement the recommendations of the Sexual Assault and Sexual Harassment Task Force, construct the HRIS, and uphold Penn State’s obligations under the AIA. We will monitor all activity related to the University’s fulfillment of its obligations under the AIA, including the completion of its annual training and certification requirements under that agreement. In the Second Annual Report, dated September 8, 2014, Senator Mitchell said, “[s]hould Penn State continue its current course of progress during the upcoming third year, I will in my 39 next annual report consider recommending that the NCAA and the Big Ten Conference conclude the Monitorship substantially earlier than scheduled.” I will address this in the coming report.